The Central Pacific spent $200,000 in Washington on bribes to get 9 million acres of free land and $24m in bonds, and paid $79m, an overpayment of $36m, to a construction company which was really its own. The Union Pacific had been given 1.2m acres of free land and $27m in govt bonds. It created the Credit Mobiliser Company and gave them $94m for construction when the actual cost was $4m. Shares were sold cheaply to Congressman to prevent investigation.
Costing over 2 billion dollars in modern money, a war depleted government can only pay in federal land for construction. The companies must finish in 15 years or lose everything. But the rail road companies are paid by the mile and the deadline doesn't stop them adding curves just to increase their profits. A 14km curve meant an extra 50 hectares of federal land.
The railroad is largest employer in American with nearly a million workers. Unlike steel and oil, there are numerous bosses. One is JP Morgan. Morgan escapes military service in the Civil War by paying $300 to a substitute to fight for him. During the War he buys five thousand rifles for £3.50 each. He sells them for $22 each. The rifles are defective and some shoot off the thumbs of the soldiers using them. Later, a congressional committee notes this but a federal judge upholds the deal as the fulfilment of a valid legal contract. (Another boss/baron is Jay Gould. His speculation on gold nearly crashed the markets and he's reported to have said over the issue of how to break strikes... I can hire one-half of the working class to kill the other half.
1877 is the year of the great railroad strikes. Three day riots in Pittsburgh leave 26 dead and $5m worth of damage. Hugh Brogan
100,000 workers had gone on strikes...More than half the freight on the nation's 75,000 miles of track had stopped running. Howard Zinn
Strikes are broken through a combination of strike-breakers (often blacks or immigrants) and federal troops. In Pennsylvania, the 9,000 strong National Guard is called out. But while the workers are on barely living wages, and the farmers transporting goods are fleeced, the owners seem untouchable. Rampant abuse brings calls for reforms.
The Interstate Commerce Act of 1887 is meant to regulate the railroads on behalf of consumers. Popular unrest is calmed but rail owner concessions are few. Similarly, President Harrison attempts reform with the 1890 Anti-Trust Act. Intended to regulate monopolies that restrain free trade, it's instead used to break the first ever all inclusive Railway Union 1894 interstate strike, with the argument that the strikers are restricting free trade.
By 1900, Morgan controls 100,000 miles of railroad, half the country's mileage. At his peak he will sit on the board of 48 corporations.
But the rail-roads create riches for others as well. Richard Sears, a station agent, from rural Minnesota, creates the mail order catalogue so goods can be sold by rail. He goes onto process over 35,000 orders a day, selling everything from refrigerators to pianos.
People, who once had to risk everything on a wagon to cross the continent, can now buy a ticket for a train, or order a sewing machine from it.
Over the next 40 years century the 300,000km of rail track carries freight that soars from 55 to 700m tonnes. Raw materials from the west feed the industries of the east. The US overtakes Britain as the largest manufacturer, soon producing 30% of the world's goods.
In 20 years the population doubles, the number of cities trebles. And where buffalo once roamed, the modern world now rises.
The long, long years of railway building created and sustained hundreds of thousands of new jobs, new towns...new markets...It was this which began to turn the Americans into a nation of...city-dwellers...And so modern America was born. Hugh Brogan
Did you know?
Before rail, Americans had set their clocks by the sun, but with five lines connecting East and West and with 8000 times across the 5 lines, scheduling became impossible. So in November 1883, continental US is reduced to four time zones, and standard time was born., With the US adjusting to new time zones, Sears turned entrepreneur and bought a batch of pocket watches, selling them to other station agents. Within six months, he sold all his 2,500 watches earning himself ten times his rail road salary. It gave the idea and the finance to set up his famous 'Sears' catalogue., Before becoming President between 1889 and 1893, Benjamin Harrison was a lawyer for the railways prosecuting rail strikers in 1887 and also was a commander of soldiers putting down the strikers.